What Happens If Homeowners Insurance Policy Canceled

What to Do If Your Homeowners Insurance Policy is Cancelled

Homeowners insurance. It's the assurance that your home will be financially protected if it is ever damaged or destroyed. Nonetheless, home insurance, like all insurance coverage, is risk-based. As a result, if a provider determines that you or your property are too risky, it may cancel your policy. However, once you understand what causes an insurer to cancel coverage, you can take steps to avoid having it happen to you.

Do you want to feel more at ease managing your homeowners insurance and protecting your home? Here's what you need to know to avoid a lapse in home insurance coverage—and how to get a new policy if your current one has been canceled.

Reasons Why Your Homeowners Insurance Could Get Canceled

Your insurance company may consider you high risk and cancel your policy for a variety of reasons, including:

• A poor inspection: Inspections are one of the most common reasons that insurance companies cancel home insurance policies. Insurance companies typically conduct exterior inspections of homes when new policies are written, as well as when policies are up for renewal. If your existing policy is up for renewal and the underwriter at the insurance company finds an unacceptable risk, it may be canceled. Roof issues, potential fire hazards, and structural issues with your home are examples of high risks. An insurer would only consider reinstating your policy if you addressed the necessary issues and repairs.
• Roof problems: A roof's average lifespan is about 30 years. Still, the older your roof is, the greater the risk it poses to your insurance company. Many providers, in fact, require an inspection if your roof is at least 20 years old, and some will refuse to insure your home if the roof is that old. If your roof fails an inspection at the time of renewal, your insurer may cancel your policy and require a roof replacement before reinstating it.
• Multiple claims: Be cautious, because filing too many insurance claims can have a negative impact. Your insurer may believe that your home has too many risks, resulting in a higher monthly premium or even cancellation of your coverage. If you combine your policies, it may have an impact on your car insurance as well.
• Living in a high-risk area: It turns out that where you live does matter. If you live in an area prone to hurricanes, flooding, and tornadoes, such as coastal areas, a provider may deem your home too dangerous to insure.
• Pets: Insurance covers not only the structure of your home, but also the contents within it, which can include the type of pets you own. Many states maintain an exclusion list for high-risk pets that they will not insure. This includes specific dog breeds as well as exotic pets like a boa constrictor. It's critical to be open and honest with your insurer about your pets. If you file a claim and your provider is unaware of the pet, they may cancel your policy.
• Failure to pay your premiums: It should come as no surprise that failing to pay your monthly premiums can put you at risk of having your coverage canceled. However, insurance providers typically provide some payment flexibility, such as a 30-day grace period to allow you to catch up on payments—though this varies by state. If you pay your entire premium during the grace period, you will be able to keep your coverage in place. However, if you are past the grace period and pose any of the other risks—for example, requiring a roof replacement or filing too many claims—you may face cancellation.

What Happens if they Cancel Your Home Insurance Policy

If your homeowners insurance lapses, a few things can happen.

First, your insurance premiums may rise. For example, if your provider cancels your policy because you were late with your monthly payments, you will almost certainly face a higher rate with another insurance company. This is because a provider may perceive you as financially unstable, making you a higher risk for them to insure. In fact, getting a policy with a new insurance carrier may be difficult because they may view your insurance lapse as too high of a risk and refuse to provide coverage.

Another option is for your mortgage company to obtain lender-placed insurance on your home. This type of coverage, also known as force-placed insurance, is a last resort. It is an insurance policy placed on your home by your bank or mortgage servicer to protect their own financial interests. The problem with lender-placed insurance is that it only protects the lender and not you, the homeowner. The cost is significantly higher than a standard policy, and it does not cover additional living expenses if you are forced to leave your home for any reason that your policy would otherwise cover.

How to Get Homeowners Insurance After Your Coverage Is Canceled

If your insurance company decides to cancel your coverage, they must notify you in advance. Typically, they will provide 45 days' notice, which means that your policy will remain in effect for the next 45 days. The time frame, however, varies by state.

You may be able to reinstate your policy or find a new insurance provider depending on the reason for your cancellation. For example, if it was due to a failed inspection, you may be able to reinstate your policy after making the necessary changes to your home, such as repairing or replacing a deteriorated roof.

If you are unable to persuade your insurance company to renew your policy, it may be more difficult to find another willing insurer, particularly if you have filed too many insurance claims or live in a high-risk area. If you are having difficulty finding affordable home insurance after a cancellation, you can file a dispute and request remediation. You can also file a complaint with your state's insurance department or a local insurance agent. They can provide a list of carriers in your area who are tasked with providing coverage for high-risk homeowners.